Before we covered political corruption in Jefferson Parish we cut our teeth on AIG.

Mississippi Insurance Commissioner Mike Chaney

“There would be nobody there to protect consumers except the lobbyists for the insurance companies,” Louisiana Insurance Commissioner James Donelon said. “That’s how federal regulation works. 

He and others pointed to the financial collapse of AIG Inc. under federal regulation. AIG insurance companies under state regulation remained solvent. 

It was never a question in my mind that AIG, including its state regulated insurance operations, were insolvent. Rather the qustion in my mind was exactly how ignorant the State insurance commissioners that parrotted that III talking point above were and the relative degree of their stupidity. Sadly for our friends in Louisiana I concluded the hands down dumbest insurance commish was Jim Donelon mainly because even Mississippi’s Mike Chaney had enough sense to not parrot Robert Hartwig’s talking points on AIG. 

Today, even our State Insurance commissioners know better than to hold up AIG as a triumph of state regulation, especially after they allowed insurers to cook their books to gain regulatory capital, a topic we well covered back in the day: 

We covered the changing of the solvency definition here, here, here, here, here, here and here. I’ll also note the State Insurance Commissioners were MIA on the Gen Re $500 million dollar sham reinsurance scandal involving AIG. Simply put these state commissioners are not equipped to regulate global insurance concerns. 

So is the failure of state regulation over insurance complete? Remembr folks the reason we allowed state regulation and an anti trust exemption for insurers back in the day was so insurer solvency would be secured so that claims could be paid. Using the original criteria can we conclude Jim Donelon and Mike Chaney are failures along with 48 other state commishes per the latest from McClatchy DC’s analysis of AIG’s finances? You betcha as Greg Gordon explains

At the peak of the 2008 financial crisis, then-Treasury Secretary Henry Paulson and top Federal Reserve officials told the nation that there was an urgent need for the government to lend $85 billion to the American International Group so the giant insurer’s temporary cash squeeze wouldn’t trigger global financial chaos. 

Nearly two years later, taxpayers are on the hook for twice that amount, and it now appears that Paulson and senior Federal Reserve officials either plunged ahead without understanding AIG’s financial situation and the risks it posed to taxpayers — or were less than candid about one of the largest corporate bailouts in U.S. history. 

Louisiana Insurance Commissioner Jim Donelon

Does anyone trust anything the government says these days? I know I don’t and AIG is exhibit A why as we continue: 

AIG was at the epicenter of all the government bailouts of financial institutions in 2008, a company through which more than $90 billion in federal money flowed out the back door to some of the same Wall Street banks whose risky behavior fueled the crisis. Among the leading beneficiaries of the AIG bailout was investment banking giant Goldman Sachs, which Paulson headed until June 2006. 

Explanations of the bailout from current and former top government officials have never fully jibed, fueling allegations that most of the money was always intended for Wall Street rather than Main Street. 

Elizabeth Warren, the chairwoman of the Congressional Oversight Panel that’s tracking the use of bailout money, said at a hearing in late May that the government “broke all the rules” with its rescue of AIG, which she labeled a “corporate Frankenstein” that defied regulatory oversight. 

The news just gets worse from here: 

As the Fed wired billions of dollars to AIG in the fall of 2008, state and federal officials assured the public that the company’s financial woes were limited largely to its parent, which had wagered $2 trillion on exotic financial instruments and incurred massive losses on housing-related investments. AIG’s six dozen U.S.-based insurance companies, the regulators said, were all on solid footings. 

A McClatchy analysis of the finances of 20 of AIG’s larger insurance subsidiaries at the time has found a much bleaker picture, however: More than $200 billion in potential red ink was obscured by entanglements in which these subsidiaries bought stock in, reinsured or guaranteed debts of their sister companies. 

Despite the regulators’ public assurances and AIG’s assertion that pooling arrangements among its subsidiaries made the liabilities look worse than they actually were, AIG has since propped up its insurance subsidiaries with $31 billion of taxpayers’ dollars, and its total debt to taxpayers — once as much as $182 billion — still could reach $162.5 billion. 

Now the company, nearly 80 percent owned by taxpayers, is reporting profits again and appears to have stabilized. Even before AIG’s planned $35.5 billion sale of a prized Asian insurance subsidiary collapsed on June 1, however, government auditors projected that bailing it out will still cost taxpayers as much as $47 billion. 

Folks I’d much rather be wrong and not be on the hook for part of the $47 billion we don’t have that was thrown down this black hole. Unfortunately the joke is on Jimbo and his sidekick Mikey the Cook and the public is stuck with the bill. 

sop

15 thoughts on “Before we covered political corruption in Jefferson Parish we cut our teeth on AIG.”

  1. OOOOOOOOOOOOOOOOOOOwweeeeeeeeeeeeee We need to have the Congress read history (the forced break up of Standard Oil) so that they can understand the real definition of “anti-trust laws” and start to apply them! Oh, I forgot about the millions in lobbyist fees that go into the pockets of Congressmen- that’s why we can’t bust up the monopolies like we did 80 years ago. PROTECTION MONEY! Sounds too much like Mafia tactics happin’in Congress…… ” you protect us from prosecution under anti-trust laws and we’ll take care of you”. Assho$%# Into Greed, AIG, needs to go and lets throw out the cry babies, Jim Donleon and Mike Chaney, with the bath water. Gotta go, I’m getting upset and nausea might cause me to lose my nanas’in the vines…Oh no, look out for the flying vomit below……………. OOOOOOOOOOOOOwweeeeeeee

  2. If you read the entitre article you will find WO Myrick’s name mentioned. WO was Jim Brown’s former examiner at LA DOI. Jim tells me if W.O. says AIG’s state insurance ops are insolvent you can take that fact to the bank.

    Back in our archives there is an old Jim Brown column where he joined us in calling out AIG and the State regulators. The NAIC took a certain amount of offense at Jim’s allegations, every one of which has subsequently borne out.

    I think you’ll also find Miss Warren actually compares AIG to organized crime which IMHO is spot on.

    The ultimate irony is our old commenter Claimsguy posted with us straight from AIG New York never missing a chance to tell us we were ignorant while his house was burning down.

    That’s alright though he had some company in a ignorant political hack named JD who never missed a chance to run down the Risgby sisters from his office computer at the US Securities and Exchange Commission during the same time period right before the market collapsed. There are reasons the SEC was MIA during that time period leading up to the market crash. I see JD has crawled out from under the rock where he was hiding, no doubt with another government job since he is again posting inane comments to certain blogs about the Rigsby sisters.

    It takes more than a little incompetence mixed with a heaping dose of arrogance to implode the financial system. And it takes a special kind of fool to make the public remarks about state insurance regulation being swell a la Jimbo the Clown.

    sop

  3. The picture of Jimbo Donelon in the clown suit defines in a single frame the perspective many Louisiana insurance consumers have of our esteemed Louisiana State Insurance Commish.

    “DO NOTHING DONELON” has, indeed, done NOTHING for insurance consumers in Louisiana during his tenure.

    He can only hope the clown suit will help him in his next interview for a job with Barnum and Bailey. (although, I’m not sure he is even qualified for that job… perhaps, maybe, he can pick up after the elephants…)..

    1. From the financially savvy Mr CLS over at Yahoo! ALL:

      Least you have forgotten:
      Prudential Financial Inc. said it has settled a suit brought by the SEC alleging it had set up a sham reinsurance transaction with General Re for Prudential’s PROPERTY-CASUALTY insurance subsidiaries.
      RenaissanceRE holdings, a property catastrophe reinsurance company, agreed to pay $15 million to settle charges that is created a sham transaction to defer $26 million of earnings, by the SEC.
      Then there was ChannelRe (worthless investments)which was rated by Moody’s & S&P as AAA.
      Let’s not forget, Zurich Financial Services that paid a $25 million penalty that were related to sham reinsurance transactions.
      Then the total default of WillowRE.

      Is it “reinsurance” or “deREvatives”.

      http://dailybail.com/home/pbs-frontline-the-warning-how-greenspan-summers-rubin-conspi.html

      The link to the Daily Bail is worth spending a few minutes visiting. We covered the same topic in late October 2009.

      sop

  4. WELL…I DON’T KNOW IF I’M BEING SHUT OFF FROM THIS FORUM TOO…BUTT MY POSTS DON’T SHOW UP ……………………………..
    STORY O MY LIFE…C’est la vie & ADIOS

    Regarding JOHN YOUNG’S GIRLIE…Julie Quinn
    In 2009, she decided to run for Jefferson Parish Council seat which was vacated by former Councilwoman Jennifer Sneed-Heebe, even though she still had two years remaining in her as Senator. In the council race on April 4 for the District 5 seat, Quinn faced business owner Kelly Daniels, accountant Cynthia Lee-Sheng (daughter of late sheriff Harry Lee), and school board member and retired educator Martin Marino.Senator Julie Quinn reputation was damaged by a series of negative relevations regarding her management skills with respect to both her personal and professional life.

    MORE on JULIE QUINN :
    ONE MUST WONDER….WHY A LOUISIANA STATE SENATOR WOULD WANT TO LEAVE HER SENATE SEAT to BECOME A JP COUNCIL MEMBER? WE SHOULD ALL ASK….WHY?
    There was the Internal Revenue Service issue for back taxes on her house in Old Metairie. There was a federal tax lien placed on the property for $265,452 for 2005 and 2006 in her name. The Senator denied knowledge of the lien.[10]
    Then there was the issue of her regularly failing to maintain her eligibility to practice law due to failure to pay LSBA dues; to comply with Supreme Court Rule 19; and to comply with the Mandatory Continuing Legal Education Rule. failure to maintain her license to practice law. She was ineligibile to practice law for the following periods:
    from 9-2-1997 to 12-22-1997;
    from 9-11-2006 to 1-5-2007; from 9-29-2007 to 10-11-2007;
    and from 7-24-2008 to 2-27-2008

    I’ve heard some harrowing tales regarding Mary Lou McCall (JOHN YOUNG’S EX) & her association with Jesuit & Catholic Church…an image search provided an even more unnerving reality…really…superficial appearances carry minimal weight…BUTT…when something is SERIOUSLY AMUCK….IT is VISIBLE
    http://blog.nola.com/times-picayune/2007/09/judge_boots_mccall_from_senate.html

  5. The whole Mark Morgan thing is just typical of the Jefferson Parish good ole boy BS. I would like to make almost $200K for the city, keep my School Board gig, AND maintain a private practice. This is absurd and something needs to be done!!!!

  6. More links Patricia.

    http://www.nola.com/news/t-p/metro/index.ssf?/base/news-23/1189147458275080.xml&coll=1

    http://bayoustjohndavid.blogspot.com/2007/06/good-christian-divorce.html

    http://righthandthief.blogspot.com/2007/05/be-my-guest-worker.html

    And my favorite. Mary Lou’s blog.

    http://miraclesforyoutoo.blogspot.com/

    Too much booze prematurely ages a person.

    And don’t you know Julie Quinn’s life was a living hell married to a addict like Patrick, who acts like he is a spoiled brat.

    None of the folks seem capable of running their personal lives. Why people vote for them is a mystery.

    sop

  7. In a T-P story exposing the tit for tat game of curatorships in JP “by which Judge to attorney who” we learn about Morgan’s private practice, and yet again another political deal lining his pockets:

    (exerpt)

    {Aaron Broussard got bulk of private legal work, appointed by Jefferson Parish judges
    Published: Sunday, February 14, 2010, 5:56 AM Updated: Friday, February 12, 2010, 7:15

    PPaul Purpura, The Times-Picayune

    Judge Ellen Kovach replaced Sassone last year and inherited the tax case. She reappointed Archer because of his experience in the case but because of the case’s size this year, she also appointed Mark Morgan, a campaign supporter with whom she served on the Jefferson Parish School Board.

    While Kovach reduced the $475 per-defendant fee to $300 and placed other restrictions on the lawyers’ income, records show Archer and Morgan stand to split $174,300 this year for trying to locate owners of 604 properties.

    “I think that the judge appointed me because she knows the way I conduct myself professionally,” Morgan said.}

    Yes Morgan is a quintessential professional…politician that is !

    And where were Kovach and Morgan weened from ? The cesspool petrie dish of corruption, THE JEFFERSON PARISH SCHOOL BOARD ! (think Broussard, Lagasse, Barry Bordelon, Chris Roberts and so many more).

    Gretna seems to have produced a new breed of tax money trough feeders, the multi-multi-multi-task HOG. I’d bet the other pigs have anxiety attacks when they see Morgan coming around. And Letten told us it was the black 2-bit Gretna Councilman Bolar and the black JP State Senator Sheppard who were the problem over on the Westbank. Morgan, like other WestBank politicians of the recent past, Ward, Coulon, Whitmer and Wilkinson, knows he doesn’t have to be concerned, he’s white.

    IMAANGRY, I feel your pain, and share your indignation…Morgan is THE poster child of this new breed of political hogs on the Jefferson Parish political horizon. And as long as we have a District Attorney who is one of them and protects them; just another emasculated La. Atty. Gen. who hires them; and a US Atty’s office that apparently can find no wrong doing by white elected and appointed Officials in Jefferson Parish, nous sommes baisee…

  8. OOOOOOOOOOOOOOOOOwweeeeeeeeeeeee I thought that after Wilkinson was forced to resign, he also thought he could have a private practice dispite the JP Ordinance reading the JP Parish Attorney was a full time job, that double dipping, slop pigs at the taxpayer’s trough were extinct. Then along comes a new, genetically engineered bigger,fatter slop pig, Mark Morgan;engineered by Mayor Ron Harris and given a brain that now Mark thinks he is entitled to the royal slop of three(3) political positions,namely school board,Gretna attorney and his private practice to boot. And then Mark “Super Engineered” Pig tells us, the taxpayers and the TP, that Gretna is getting a bargain!I say the voters of Jefferson Parish need to have a good ole’ boy fashion pig roast and remove Mark’s fat ass from the school board at the next election and the same for “Dr.Frankenstein” Mayor Harris who created these new species triple dipping, super slop, misfit type pigs. Enjoy your slop while you can Mark and Ron cause you will soon be extinct too.OOOOOOOOOwweeeeeeeeeeeeeeeee

  9. And speaking of Morgan, obviously he and mini-me Roberts (also from Gretna on the JP’s WestBank) didn’t read, or most probably could care less about, the Bill of Information the US filed against Eddie Price; who among other wrong doing, pled guilty to violations in Count 1, B.4 of using campaign funds for personal use unrelated to any campaign or public office and falsely reported the use of those funds as campaign expenses on his campaign expenditure reports. Described as part of the scheme, the Bill of Information set forth that:

    “Price also used his campaign fund to pay for thousands of dollars in Carnival krewe memberships, $600 in personal clothing, $585 in wine, $300 to a custom closet company and hundreds of dollars in groceries for his family, prosecutors allege…”

    Well Mr. Letten, if you some how thought Price was extravagant, what do you think about this shameless and arrogant display of “nothing’s going to happen to me” attitude of Chris Roberts ?

    I have previously written, in exhaustive detail, about the $190,000 dollars Chris Roberts spent in 2009, a non-election year, twice the amount that Young depleted (coming in second at $89,000 dollars). Roberts bought a “Streetcar Float” and a tractor to pull the float for $50,000 plus dollars (storage is monthly); we also know that he spent over $7,000 dollars on Mardi Gras throws($278 for cabbage); purchased a snoball machine and related expenses for almost $5,000 dollars; another $5,500 hundred for maintenance and storage of his antique fire truck; some $7,800 dollars for “people transportation”; $2,000 for a private party in Grande Isle; and the nauseating list goes on.

    And just today I picked this post up on NOLA under the JP School Board crap relative to Morgan’s “Holly-go-lightly” free-flowing campaign fund spending, as you read the following:

    vinyledge August 01, 2010 at 8:41PM
    Follow
    PLEASE NOTE THESE EXPENDITURES REGISTERED by MARK MORGAN
    Expense – Advertising Plastic Cups $1560.00

    Expense – Electric car for promotional use $5858.25

    Reimbursement to mcm for electric car repair damage at Connick Tournament $405.53

    Mark Morgan 230 Huey P. Long Avenue Gretna, LA 70053 Expense Reimburse – sound & light system upgrades for electric car $1505.54

    Committee to Elect Elton Lagasse Donation $2000.00

    Cynthia Lee-Shens (sic) Campaign Donation $1000.00

    Various Fuel Stations Gretna / Kenner LA Expense 20% total monthly fuel cost 2005 2006 2007 (36 months) $1140.00

    GMAC Expense 20% total monthly vehicle cost 2005 2006 2007 $5664.00
    http://204.196.0.52/la98/search.html

    ******PUBLIC RECORDS ACCESSIBLE ON LINE!!!!!!!!!….INFORM YOURSELVES!

    I don’t know about anyone else, but… comment, dans cette putain de se !

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